Pharma Industry Watch List for 2018

By Patricia Van Arnum - DCAT Editorial Director

Which executives and other leaders may have the largest impact for the pharmaceutical industry in 2018? DCAT Value Chain Insights offers a top ten ranking.

Which executives should be on your radar in 2018? DCAT Value Chain Insights examines some movers and shakers in the pharmaceutical industry for 2018.

Pharma industry watch list for 2018:

1. Teva Pharmaceutical Industries' President and CEO Kåre Schultz. The year 2018 will be an important one for Kåre Schultz, who took over as president and CEO of Teva Pharmaceutical Industries on November 1, 2017. Schultz is tasked with improving the financial position of the company, which includes $32 billion in debt brought on in part by the company’s $40.5-billion acquisition of Allergan’s generics business in 2016. The company also is facing underperformance in its generics business, particularly its US generics business, and generic-drug incursion for its top-selling product, Copaxone (glatiramer acetate injection), a multiple sclerosis medicine, which had 2016 sales of $4.2 billion. In December 2017, Shultz announced a detailed two-year restructuring plan that includes a reduction of 25% of its workforce or 14,000 positions globally, closures or divestments of research and development (R&D) facilities and offices and a $3-billion reduction in its annual costs. Schultz has also put into place a new executive team and organizational structure designed to increase internal efficiencies by reducing layers of management and simplifying business structures and processes across the company's global operations. The company is also proceeding with a restructuring of its manufacturing and supply network, including the closures or divestments of a significant number of manufacturing plants in the US, Europe, Israel and Growth Markets. So the key question for 2018 is will Schultz be able to deliver?

Vasant Narasimhan, MD, current Global Head of Drug Development and Chief Medical Officer for Novartis, will become CEO, effective February 1, 2018Source: Novartis

2. Vasant Narasimhan, soon-to-be new CEO of Novartis. Novartis will see a new CEO taking the helm in 2018 when Joseph Jimenez, current CEO, will step down on January 31, 2018 and turn the reins over to Vasant Narasimhan, MD, current global head of drug development and chief medical officer at Novartis. Jimenez is turning the reins over to Narasimhan at a significant juncture for Novartis as the company faces relatively flat sales, in part due to generic-drug competition for one of ts top-selling products, the anti-cancer therapy, Gleevec/Glivec (imatinib), and other products and as it faces forthcoming decisions on the future of Alcon, its eye-care division. The company announced a strategic review of Alcon in 2017 due to underperformance, but the business showed improved results in 2017. Novartis says it will continues to evaluate the business to see if favorable results will continue in 2018, with a decision expected in the first half of 2019.

Key for Narasimhan is bolstering the company’s pharmaceutical business. Novartis consists of three divisions: Innovative Medicines (its prescription-drug business), Sandoz (its generics and biosimilars business), and Alcon (its eye-care division). In moving to the CEO position this year, Narasimhan will be inheriting a company that had relatively flat sales in its mainstay pharmaceutical business in 2017. In 2017, Novartis reported overall net sales of $49.1 billion, up only 1% (2% on a constant currency [cc] basis), and Innovative Medicines, which accounted for 67% of the company’s 2017 revenues, delivered net sales of $33.0 billion (+1%, +2% cc) in the full year, which included $2.1 billion from Cosentyx (secukinumab), a drug to treat psoriasis, ankylosing spondylitis, and psoriatic arthritis, and $507 million from Entresto (sacubitril/valsartan), a drug to treat heart failure. Both drugs, approved by the US Food and Drug Administration in 2015, are key current and future performers for the company as it faces generic-drug competition for key products. Chief among them is Gleevec/Glivec (imatinib), a drug to treat a certain form of leukemia and certain types of gastrointestinal stromal tumors. Gleevec/Gilvec was the company’s top-selling drug in 2016 with sales of $3.3 billion, but sales declined 42% in 2017 to $1.9 billion due to generic competition.

Emma WalmsleyCEO, GlaxoSmithKlineSource: GlaxoSmithKline

3. Emma Walmsley, CEO of GlaxoSmithKline. Emma Walmsley took over as CEO of GlaxoSmithKline (GSK) in April 2017 after leading the company's consumer healthcare business. As she faces her one-year anniversary in April 2018, she is pursuing a strategy to improve results in the company’s three core areas: pharmaceuticals, consumer healthcare, and vaccines. In its pharmaceuticals business, in 2017, Walmsley has already made some moves. In 2017, the company reported on a priority list of assets and has set a target to deploy 80% of its pharmaceuticals R&D capital to priority assets in two current therapy areas (respiratory and HIV/infectious diseases) and two potential areas (oncology and immuno-inflammation). The company expects significant clinical data from these priority assets over the next several years, which will be used to inform R&D investment decisions and how best to generate value from these assets. GSK says it also expects to pursue “disciplined business development” to augment its early-stage pipeline in these priority areas. GSK has made decisions to terminate, partner, or divest more than 30 preclinical and clinical programs. It has also undertaken a strategic review of its rare diseases unit and is now considering options for future ownership of these assets. In addition, the company is taking steps to improve the partnership between R&D and its commercial organization as well as its governance around pipeline decision-making with the establishment of a new Development Advisory Board and a new Board Scientific Committee in 2017.

4. Celgene’s Executive Chairman Robert Hugin and CEO Mark Alles. Both Celgene’s Executive Chairman Robert Hugin and CEO Mark J. Alles took their respective roles in March 2016, with Hugin moving from CEO to executive chairman and Alles moving from president and chief operating officer to CEO, and as they near their two-year mark, the company is in a growth mode. Celgene reported on January 8, 2018 preliminary 2017 results of $13 billion, a 16% gain year over year. In 2018, the company said it expects total revenue to be approximately $14.4 billion to $14.8 billion, a 12% increase year-over-year. Its top-selling product is Revlimid (lenalidomide), an anti-cancer therapy, which the company projects 2018 sales of $9.4 billion, which would be a 15% increase year over year. Key for the executives is to develop a strategy to address generic competition for Revlimid when last patents expire in 2024 in Europe and in 2027 in the US (note: a volume-limited generic by Natco can enter the US market in 2022). The company is already making moves with two large-scale acquisitions thus far in 2018: a proposed $9 billion acquisition of Juno Therapeutics, a company developing chimeric antigen receptor T cell (CAR-T) therapies and T cell receptor therapeutics for multiple targets and cancer indications, and a proposed acquisition of Impact Biomedicines, a San Diego, California-headquartered biopharmaceutical company, in a deal worth up to $7 billion, which includes $1.1 billion upfront and up to $5.9 billion in regulatory and sales milestones, The key product from Juno is JCAR017 (lisocabtagene maraleucel; liso-cel), a CD19-directed CAR T therapy for treating relapsed and/or refractory diffuse large B-cell lymphoma. Celgene said it expects regulatory approval for JCAR017 in the US in 2019 with potential global peak sales of approximately $3 billion.

5. Gilead Sciences’ Executive Chairman John Martin and President and CEO John Milligan. Gilead Sciences’ Executive Chairman John Martin and President and CEO John Milligan both assumed their respective roles in March 2016 with Martin previously serving as chairman and CEO and Milligan as chief operating officer. The executives put the company on the fast track, led by its hepatitis C virus (HCV) franchise, and the company posted overall revenues of $30.4 billion in 2016. Antiviral product sales, which include sales of the company’s HIV, other antiviral products, and HCV products were $27.7 billion in 2016, compared to $30.2 billion in 2015. The company is also making a major play in the CAR-T therapy market with its $11.9-billion acquisition of Kite Pharma in 2017.

6. Joaquin Duato, Executive Vice President and Worldwide Chairman, Pharmaceuticals, Johnson & Johnson. Joaquin Duato, Executive Vice President and Worldwide Chairman, Pharmaceuticals, Johnson & Johnson (J&J), was behind one of the largest acquisitions in 2017: J&J’s $30-billion acquisition of Actelion, a Swiss pharmaceutical company, a deal completed in June 2017. For J&J, the acquisition of Actelion added a rare-disease focus to the company’s pharmaceutical business, which posted 2017 sales of $36.3 billion. The move provided J&J with a specialist in pulmonary arterial hypertension with a $1-billion plus franchise. Key for Duato going forward is to offset generic competition for its top-selling pharmaceutical, Remicade (infliximab), an anti-inflammatory drug, which posted 2016 sales of $6.97 billion.

7. US FDA Commissioner Scott Gottlieb. Scott Gottlieb, MD, became the new Commissioner of the US Food and Drug Administration (FDA) in May 2017. Gottlieb, a physician, medical policy expert, and public health advocate, previously served as the FDA's Deputy Commissioner for Medical and Scientific Affairs and before that, as a senior advisor to the FDA Commissioner. Among the policy priorities set by Gottlieb are: improvements to the generic-drug review process as part of a plan to improve drug competition; addressing the opioid drug crisis, including ways to further development of abuse-deterrent technologies, including for generic drugs; and implementation of the 21st Century Cures Act, which was signed into law in December 2016 and is designed to help accelerate medical product development.

8. Department of Health and Human Services Secretary Nominee Alex Azar. President Donald Trump’s nominee for the US Department of Health and Human Services (HHS) is Alex Azar, a former executive at Eli Lilly and Company and former HHS Deputy Secretary and General Counsel. Azar was nominated to be the new HHS Secretary following the resignation of Tom Price as HHS Secretary in September 2017. He was confirmed by the US Senate on January 24, 2018, Azar will take on many leading policy issues, including healthcare reform and heightened attention to drug pricing.

9. European Medicines Agency's Executive Director Guido Rasi. Guido Rasi began his second term as Executive Director of the European Medicines Agency (EMA) in November 2015, and he will be facing one of the agency’s largest challenges as it prepares for the UK’s exit from the European Union (EU) (i.e., Brexit). In 2017, in preparation for the UK’s withdrawal from the EU, EU member states selected Amsterdam, the Netherlands as the new headquarters for the EMA, the EU’s pharmaceutical regulatory authority, now headquartered in London. The agency is preparing for the move with the goal to take up its operations in Amsterdam by March 30, 2019. The EMA has been based in London since it was established in 1995. It currently employs nearly 900 staff members.

10. Theresa May, UK Prime Minister, and European Commission President Jean-Claude Juncker. One important issue for the pharmaceutical industry in 2018 will be the ongoing negotiations led by Theresa May, UK Prime Minister, and European Commission President Jean-Claude Juncker on the withdrawal agreement and eventual trade policy with the UK and the EU post-Brexit. In December 2017, the European Council formally agreed that sufficient progress had been made to move to the second phase of the negotiations and adopted guidelines for that second phase. The guidelines set out the need for the EU and the UK to complete work on all withdrawal issues and to start drafting the withdrawal agreement.

Key for the pharmaceutical industry in 2018 will be the continued Brexit negotiations between the UK and EU and its impact on pharmaceutical trade, investment, and regulation between the UK and EU. Nine associations representing the European and British pharmaceutical, biotechnology and over-the-counter medicines industries have stressed the importance of securing cooperation and a timely agreement between the UK and EU on medicines regulation as the parties negotiate trade policy post-Brexit. These associations include: the European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents European innovator, research companies and national pharmaceutical associations in Europe; Medicines for Europe, which represents generic-drug manufacturers in Europe; EuropaBio, which represents European biotechnology companies; the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE), which represents small-to-medium-sized innovator pharmaceutical companies in Europe; the Association of the European Self-Medication Industry (AESGP), which represents manufacturers of non-prescription or OTC medicines in Europe; the Association of the British Pharmaceutical Industry (ABPI), which represents pharmaceutical manufacturers in the UK; the British Generic Manufacturers Association (BGMA), which represents generic-drug companies and suppliers in the UK; the UK BioIndustry Association (BIA), which represents biotechnology companies in the UK; and Proprietary Association of Great Britain (PAGB), which represents OTC manufacturers in the UK.

<p><em>Editor's Note: This article was updated to reflect the confirmation of US HHS Secretary Alex Azar by the US Senate.on January 24, 2018. </em></p>